Biodiesel companies get caught in a circle

The government and investors wait and see each other and don’t invest in it, making the company dilemma. Food waste The biodiesel industry is trapped in a “chicken or egg” cycle.

In fact, the government’s determination to treat waste oil has become increasingly apparent with the introduction of various policies. Biodiesel from kitchen wastes also welcomes a favorable policy environment.

On February 1, 2011, the national biodiesel blending fuel (B5) standard was formally implemented, requiring biodiesel to be added to fossil diesel in a 5% ratio.

On June 30, the Ministry of Finance and the State Administration of Taxation jointly issued a notice clarifying the scope of exemption from the consumption tax for the production of pure biodiesel from animal and vegetable oils.

On August 2, the National Development and Reform Commission, the Ministry of Finance, and the Ministry of Housing and Urban-Rural Development announced plans to allocate 630 million yuan in special funds for the development of circular economy to support 33 pilot cities (regions) in the country to carry out the utilization and harmless treatment of restaurant kitchen waste. It is reported that the first batch of 5 million funds in various cities (districts) is being allocated. According to sources, unlike the previous similar projects, the National Development and Reform Commission adopted the first allocation method, which shows the determination of the government to manage waste oil.

Why then is there a strange situation in which the government and investors wait and see each other and move forward?

Yao Jianming, a researcher at the Chinese Academy of Sciences' Hefei Institute of Physical Science, said in an interview with a reporter from the "Science Times" that the reduction of consumption tax is beneficial to the development of enterprises, but the impact is limited. The bottleneck that really restricts the development of the industry is still that the source collection and transportation system is not established. "This also directly leads investors to not invest in." Yao Jianming said.

Lu Xinuo, the technical director of Beijing Qingying Lihua Petrochemical Technology Co., Ltd., also told the Scientific Times: “Of course, companies want to follow the government, but now the baton is not yet clear.”

Can cooking oil change biodiesel? Contradictions focus on whether local governments can do something at source management.

After the company called for the government to exempt from the consumption tax policy, biodiesel has formed a cost advantage of up to 900 yuan per ton for ordinary fossil diesel. An official of the Ministry of Finance once expected that biodiesel production will show a geometric explosion of "explosive growth."

However, the facts did not develop in this direction.

Due to the scarcity of raw materials, large-scale production cannot be achieved, and many biodiesel companies still face a loss-making dilemma.

The chain of interests of food waste from kitchens, pigs from Shushui, and waste oil has formed for many years. It is profitable and stable, and it is difficult to be broken. In the process of resource hawkers competing for resources on the same ground, there are many examples of biodiesel companies stopping production or even bankruptcy because they do not have sufficient raw materials.

According to Rusnowo, Qingyan Petrochemical's raw materials for biodiesel production include waste oil and oil crops. Among them, waste oil is mainly sourced from regular restaurant kitchen waste recycling companies in Beijing, and it purchases about 3,000 tons per month for one month. The cost will be more than 16 million yuan.

As waste oil can also be used to produce high value-added feed oil, fatty acids, etc., even government-designated oil recovery companies have raised the price of waste oil to 5,500 yuan per ton. In 2006, Qingyan Petrochemical's cost per ton of biodiesel was only between 3,700 and 3,900 yuan.

For the method of directly signing contracts with the government to ensure the source of raw materials, Qingyan Petrochemical had thought about it but could not start. They could not even find the government business department responsible for related matters.

Yao Jianming pointed out that the core problem in the development of biodiesel from food wastes is that there is no strong government action and no government collection and transportation system has been established.

"Like a domestic garbage incineration power plant, it must rely on the government to ensure that the amount of garbage every day, companies are not able to find their own garbage." Yao Jianming said.

It is reported that Chongqing, which is doing relatively well in our country's cities, can collect more than 300 tons of waste oil raw materials every day. Yao Jianming pointed out: "That is because of the advancement of the Chongqing Municipal Government. If the government is determined to do this, it will surely be made, just as the previous medical waste has now been properly disposed of."

Rusino said that biodiesel extraction technology in 2006 has been very mature, and the collection and transportation of raw materials is the last step in the development of biodiesel from waste oil.

"This technology is no problem. The equipment is readily available and the management method is ready. It is the government that has not made up its mind and is still watching." Yao Jianming said.

The reporters interviewed during the investigation of the “First Chicken or Egg First” reporter found that despite the good news, the atmosphere of the wait-and-see all over the country is still very strong. At present, China has not yet established a normal operation of the kitchen waste recycling. And harmless engineering projects.

"The reduction in cost is necessarily a good thing for product promotion." Rusino also pointed out that "private enterprises, whether they invest in technology research and development or investment in the industry, must rely on their own profits to achieve. The government will not give subsidies in the development process, even if Some symbolic rewards are relative to industrial investment."

Yao Jianming also said that the amount of biodiesel tax exemption is only a small part compared with corporate investment. The National Development and Reform Commission's first allocation of 500 million yuan to the pilot cities (districts) is not enough to solve all the problems.

Capital, the first problem that the company encountered in the face of the market, also plagued Yao Jianming. "For those of us who work as technology, when the market is facing, the market always chooses reliable technology. For example, my technology has done a good job, and it has cost millions to complete the pilot test. As a result, the government still does not approve, but also see demonstration projects. This requires greater investment." Yao Jianming said.

In order to go from the pilot to the demonstration project, Yao Jianming found that many investors hope to continue, but the other party's response is basically the same: first with the government to reach an agreement, first establish a collection and transportation system, with the source of government guarantees, we will invest.

This formed a "first chicken or egg" endless cycle of government required to see the actual operation of the demonstration project to support, and the capital side because of the government does not have the establishment of the collection and transportation system can not invest.

Many technology holders are thus caught in a dilemma.

Previously, industry insiders analyzed that if the reduction of exemption of consumption tax and the management system of waste oil source can be carried out in 2011 at the same time, the biodiesel industry will usher in spurt development.

Now that the former is basically implemented, the latter is still unclear.

“It is in such an entangled state, everyone is waiting, but no one takes the initiative to take a step forward.” Yao Jianming said.